Good Morning Operators !

I hope you all had a wonderful & restful long weekend - I took a quick trip to visit one of my best friends down in South Carolina and got some golf swings in. I also caught the president’s day shopping bug and made an impulse purchase that I cannot WAIT to use on the golf course this season. Today’s newsletter is all about why competition is GOOD. Before we get into our content, here’s a brief note from our sponsor, Nostra.

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Getting Past our Egos: Why Competition is Good

Believe it or not, Competition is actually GOOD. As a brand operator, you want to have peers in your category building up demand within your TAM because they do some of the heavy lifting around moving the consumers that are "problem-unaware" over to "problem-aware", and if they're exceptionally good, even into the "solution-aware" portion of the purchase journey.

Do you want to know who the easiest net new customers are to acquire? Those are the ones who already know about the problem and why it's relevant to them, and know that solutions exist and are already shopping for those solutions. Let’s say you’re a cookware brand like Hexclad (and let’s pretend that you own your own retail stores for the sake of this example). If you have two Moms that walk through the door, both with the same purchasing power, but one already knows about why buying high end cookware is important and the other has bought cheap teflon pans for her entire life, which one are you going to walk up to first?

This is the benefit of good competition. Your competitors at Our Place and Caraway have already invested the marketing dollars and sales resources in reaching mom #1 and all you have to do is convince her to buy one of YOUR pans instead of walking across the street to the Caraway store and buying one of theirs. In the explosion of choice enabled by online marketplaces and DTC brands, the awareness work done by your competitors generates even more value for you as an operator. One way to capture this value is to look at terms consumers use when shopping. A consumer who uses terms such as “cooking ideas” followed by “best pan for basting steak” while browsing online, not only tells you a lot about what that potential customer is shopping for, but also the maturity of their shopping journey. If shoppers are adding brand names to these terms, that means even more work has been done for you, because it means that they are solution-aware. This means that you only need to make sure you get in front of those shoppers while they are still choosing which brand to purchase from.

If you’re a brand like Hexclad and you make the best cookware on the market (according to yours truly), ome of the easiest customers you'll convert will be those who were first shown an ad from Our Place or Caraway.

Why Competition Makes You Better

1. Product Innovation: Forces you to make better products.

When brands compete, they are always looking for ways to differentiate their products. Consumers and the market ultimately benefit from a more competitive market because the market players are incentivized to build the best possible product.

Think about what sorry state smartphones would be in if Apple hadn’t come along and built the iPhone. Not only would smartphones likely not have the same capabilities they do today - they likely would be a lot uglier. Apple started a movement around hardware design that was accelerated by the launch of the iPhone. Because Apple makes beautiful phones, Samsung and others have pressed themselves to follow suit in building beautiful and sleek devices.

2. Drives Price Competitiveness: Competition puts pressure on brands to keep their prices in check. This can lead to lower prices for consumers, especially in categories with commoditized products. If P&G charged $100 for a tube of Crest toothpaste, they’d lose massive market share to their competitors.

Additionally, this drives pricing innovation by way of promotions or “special offers” to attract customers away from other brands. Think about all those ads you see from different telecom brands offering a “free iPhone/samsung galaxy etc” when you switch from one to the other.

3. Cuts out BS marketing: If your marketing creatives don’t tell a strong story about your brand and your product, shoppers will choose the other brands over yours. Better marketing equates to a more educated consumer base within the TAM, which means consumers will be more likely to make purchasing decisions that they’re satisfied with (and be higher LTV customers for the brands they purchase from, which means that everyone wins!).

Playing to Win: Building a Moat in your Competitive Market

Let’s say you’re at Hexclad and you want to win share away from Caraway during the post president’s day shopping period - Right now there’s lots of opportunity to get ahead of any easter gift planning or shopping from consumers looking to do a “spring cleaning” refresh of their cookware at home.

• Branding: Let the Best Product win

  • Why is YOUR Solution Different? What makes YOU Special? Make sure you communicate your differentiated product attributes in all of your creative copy.

    • This creative from Hexclad is a great example because it shows the product in action & being used - A potential shopper can literally SEE the superior features being demonstrated.

  • Let the product tell your “Why” to the customer. Think about how Apple advertises - they don’t sell you a phone, they sell you a vision of what your life could be like when using their products.

• Offer: Communicate the Value & “ROI” from this purchase

  • Can’t compete on price? Show shoppers how they can get the most value from you - Bundles are a great way to do this and this is another area where Hexclad wins big. They consistently offer discounts for their 6 & 12 piece sets. Why does this work ? They get their customers to commit to spending more upfront (higher AOVs) which in turn helps them take up MORE real estate in the kitchen, making it LESS likely that customers who purchase their sets will opt for additional cookware pieces from another brand, such as caraway.

    • A note on pricing strategy for bundle promotions- it’s always best to show a $$ value to highlight how much $$ the shopper is saving by purchasing more. Hexclad does this by crossing out the old price and showing the “promo” price of the bundle with the % off added. If the customer can see they’re “saving” $XX by purchasing more product from you vs less, they will find the bundle more compelling.

• Differentiated Calls to Action:

  • Look at what your competitors are using as calls to action and value propositions and use that to inform your creatives to convert “problem-aware” customers.

    • Caraway emphasizes “Aesthetic cookware” and “non-toxic & non-stick” pretty consistently to describe their products in their ad copy (Example). If I were at Hexclad, I would consider playing against that through leveraging luxury-centric messaging such as “Be your own Executive Chef” or poking fun directly, “Dinner for two: Toxins and Tearful cleaning not included”.

If you’re able to execute well on a differentiated product, offer, and creative, you should fear no competitor. In fact, you should welcome each new competitor in your category - they’re educating potential customers about your category, effectively doing some of the top of funnel work for you.

That’s all from me today, have a GREAT week everyone!

Zach